The financing of treatment for alcoholism has undergone significant change over the past decade. Managed care organizations now dominate the market for private alcohol treatment services. In particular, "carve- out" organizations that specialize in mental health and substance abuse care, including alcohol treatment, have become especially important in the market. Despite this growing trend, little research has been done on the generosity of the benefits offered by these organizations with regard to treatment for alcoholism. This project seeks to fill this gap in the knowledge base. We will examine benefit information from a large "carve-out" managed behavioral health plan that provides service to millions of patients across the nation. Linking this benefit information to patient-specific claims information, we will explore the relationship between the use and costs of alcoholism treatment services and the generosity of the insurance plans. We will focus, in particular, on the effects of co-payments, deductibles, and limits on insurance. From these descriptive studies, we will proceed to develop and estimate a dynamic economic model of the demand for alcohol treatment services. This model will incorporate the complex pricing schemes induced by the structure of cost sharing mechanisms in modern health insurance plans. Also, it will allow for uncertainty in the effects of expenditures on alcoholism treatment on health. Using estimates from this dynamic model, we will simulate the effects of various policies on costs and use of alcohol treatment services. For example, using our framework, we will be able to accurately estimate the costs of parity legislation for alcoholism treatment.